As part of the dual listed company structure, Mondi Limited and Mondi plc (together ‘Mondi Group’) notify both the JSE Limited and the London Stock Exchange of matters required to be disclosed under the Listings Requirements of the JSE Limited and/or the Disclosure Guidance and Transparency and Listing Rules of the United Kingdom Listing Authority.

This announcement contains inside information.

Half-yearly results for the six months ended 30 June 2018

Highlights

Strong financial performance

Underlying EBITDA of €852 million, up 17%, with margin of 22.9%

Profit before tax of €490 million, up 6%

Basic underlying earnings of 89.2 euro cents per share, up 26%

Cash generated from operations up 18%

Return on capital employed 21.3%

Excellent performance from Packaging Paper

Good progress on major capital investment projects

Integration of recent acquisitions on track, expanding the Group’s containerboard portfolio and network of industrial bag plants in high growth regions

Interim dividend declared of 21.45 euro cents per share

Financial Summary

(Restated)1

(Restated)1

€ million, except for percentages and per share measures

Six months ended 30 June 2018

Six months ended 30 June 2017

Six months ended 31 December 2017

Group revenue

3,727

3,582

3,514

Underlying EBITDA2

852

730

752

Underlying operating profit2

630

503

526

Operating profit

530

508

460

Profit before tax

490

461

423

Per share measures

Basic underlying earnings per share2 (euro cents)

89.2

71.0

77.9

Basic earnings per share (euro cents)

72.5

72.1

65.8

Interim dividend per share (euro cents)

21.45

19.10

Cash generated from operations

722

612

751

Net debt2

2,450

1,679

1,532

Underlying EBITDA margin2

22.9%

20.4%

21.4%

Group return on capital employed (ROCE)2

21.3%

18.5%

19.3%

Notes:

1 The Group has early adopted the new 'Leases' accounting standard, IFRS 16. Consequently, the audited annual financial statements for the year ended 31 December 2017 and the reviewed interim financial statements for the six months ended 30 June 2017 have been restated. Further details are disclosed in notes 2a and 2b of the condensed combined and consolidated financial statements

2 The Group presents certain measures of financial performance, position or cash flows that are not defined or specified according to International Financial Reporting Standards (IFRS). These measures, referred to as Alternative Performance Measures (APMs), are defined at the end of this document and where relevant, reconciled to IFRS measures in the notes to the condensed combined and consolidated financial statements. APMs are prepared on a consistent basis for all periods presented in this report

Peter Oswald, Mondi Group Chief Executive Officer, said:

"Mondi delivered a strong performance in the first half of 2018, with underlying EBITDA of €852 million, up 17% in the period. We benefited from good demand across our packaging businesses as well as higher average selling prices, while remaining focused on initiatives to drive performance and mitigate inflationary pressures on our cost base. We saw a strong operational performance across the pulp and paper businesses, with the exception of the extended shut at our Richards Bay mill (South Africa).

We continue to make good progress in securing future growth and ensuring the ongoing cost competitiveness of our operations through the delivery of our major capital expenditure programme of over €750 million, which is expected to contribute to earnings from 2019. Themodernisation of our kraft paper facility in Steti (Czech Republic) is on track to start-up in late 2018 and work to upgrade the pulp mill at our Ruzomberok mill (Slovakia) has commenced, while we await final permits to proceed with our investment in a new 300,000 tonne kraft top white machine at the same site. We continue to make good progress on smaller capital expenditure projects at a number of our packaging operations, while integration of the recently completed acquisitions is progressing according to plan.

The trading environment remains positive going into the second half of the year, with pricing in key fibre based product segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and comprehensive cost reduction programmes.

Mondi is uniquely positioned to develop sustainable fibre and plastic based packaging solutions. With our robust business model, focus on leveraging key industry trends of sustainability, e-commerce and convenience, and culture of driving performance, we remain confident of sustaining our track record of delivering value accretive growth."

Group performance review

Underlying EBITDA for the half-year ended 30 June 2018 of €852 million was up 17% compared to the first half of 2017. Stable volumes and higher prices more than offset higher costs, negative currency effects and the impact of maintenance shuts. The fibre based packaging value chain, comprising Packaging Paper and Fibre Packaging, was the main contributor to the improved performance, driven by a combination of higher prices and strong operational performance.

Revenue was up 4% on a like-for-like basis, supported by higher average selling prices across all our businesses and volume growth in Containerboard and Industrial Bags. Input costs were higher than the comparable prior year period with the notable exception of paper for recycling costs, with average European benchmark prices down 27% and 30% on the comparable prior year period and the second half of 2017, respectively. While there remains uncertainty, caused mainly by Chinese import policies, we are seeing signs of stabilisation in European paper for recycling markets, with benchmark prices holding steady during the second quarter and July. Wood costs were generally higher in local currency terms in northern and central Europe during the first half of the year. Energy costs were higher than the comparable prior year period driven by increasing commodity input prices. Cash fixed costs were higher as a result of inflationary cost pressures across the Group and the impact of mill maintenance shuts. Depreciation and amortisation charges were marginally lower during the period.

In June 2018, we completed the acquisition of Powerflute, an integrated pulp and paper mill in Kuopio (Finland) with an annual production capacity of 285,000 tonnes of high-performance semi-chemical fluting, for a total consideration of €363 million on a debt and cash-free basis. We are pleased with the progress made to date with the integration of this business, which further broadens our containerboard product portfolio and geographic reach.

In the first half of 2018, we completed a longer than anticipated annual maintenance shut at our Richards Bay mill, a maintenance shut at our Syktyvkar mill (Russia) and smaller shuts at some of our other mills. The balance of our maintenance shuts are scheduled for the second half of the year. Based on prevailing market prices, the full year impact on underlying EBITDA of the Group's maintenance shuts is estimated at around €115 million (2017: €95 million) of which the first half effect was around €55 million (2017: €40 million).

Currency movements had a net negative impact on underlying EBITDA versus the comparable prior year period. The weaker US dollar had a net negative impact mainly on dollar denominated sales of a number of the Group's globally traded products, while the weaker Russian rouble had a net negative impact on translation of the profits of the domestically focused Uncoated Fine Paper business.

Basic underlying earnings were up 26% to 89.2 euro cents per share, with strong improvement in underlying operating profit and lower net finance charges partly offset by an increase in the effective tax rate from 19% in the prior year period to 22% in the current period. After taking the effect of special items into account, basic earnings of 72.5 euro cents per share were up 1% on the comparable prior year period.

An interim dividend of 21.45 euro cents per share has been declared.

Packaging Paper

(Restated)

(Restated)

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Six months ended 31 December 2017

Segment revenue

1,311

1,141

1,151

Underlying EBITDA

430

301

338

Underlying operating profit

351

226

258

Special items (charge)/income

(55)

5

(2)

Capital expenditure

172

122

161

Net segment assets

2,568

2,087

2,169

Underlying EBITDA margin

32.8%

26.4%

29.4%

ROCE

31.3%

22.8%

25.6%

Underlying EBITDA of €430 million was up 43% on the comparable prior year period with higher selling prices, higher sales volumes and a better mix more than offsetting higher costs and negative currency effects.

Containerboard markets remain robust, with good demand and limited capacity additions continuing to support pricing. Selling prices were up significantly on the prior year period and up sequentially, following price increases implemented through the course of 2017 and during the first quarter of 2018. Average benchmark European selling prices for unbleached kraftliner were up 24% on the comparable prior year period and up 7% on the second half of 2017, while average benchmark European selling prices for recycled containerboard were up 18% on the first half of 2017, and up 6% sequentially. By contrast, benchmark white top kraftliner and semi-chemical fluting prices were up a more modest 8% to 11% on the comparable year and 5% to 6% up on the preceding six month period. Margins in containerboard were further supported by the significant decline in paper for recycling prices. On an annual basis, the Group consumes around 1.3 million tonnes of paper for recycling in the production of containerboard.

In response to sustained good demand, a strong order position and higher input costs, we have announced further price increases of €40/tonne for selected virgin containerboard grades to take effect across European markets from September 2018.

From January 2018, we implemented sack kraft paper price increases in the range of 8% to 9% compared to average 2017 price levels across all geographies. Markets remain very tight, with good demand, particularly in our export markets, coupled with constrained supply. At the end of the second quarter, further price increases in the range of 5% to 7% were implemented in Europe, where most of our volumes are integrated. In overseas markets, price increases are being implemented for the limited volumes that are not fixed by annual contracts.

We continue to see good demand across our range of speciality kraft papers in Europe, supported by the drive to replace plastic carrier bags with paper-based alternatives. Selling prices were, on average, higher than the comparable prior year period and higher than the second half of 2017.

With the exception of paper for recycling, costs were above the comparable prior year period, mitigated by our ongoing cost reduction programmes. We saw higher wood and energy costs, inflationary increases on cash fixed costs and a higher depreciation charge during the period. The business benefited from higher average green energy prices in Poland. In the first six months of the year, we completed a planned maintenance shut at our Syktyvkar mill and an extended shut at our facility in Richards Bay. During the second half of the year, planned maintenance shuts are scheduled at Swiecie (Poland) and the majority of our kraft paper mills, including an extended shut at Steti as we progress to commission the modernisation of this operation.

In May 2018, we decided to stop production of in-line silicone coated products at our facility in Steti. The Group had rebuilt one of its paper machines at the mill with an in-line coating extension, an innovative process technology. Despite the progress achieved, the improvements did not outweigh the increased technical challenges and process complexity. Production of speciality kraft paper at the machine will continue, while we will revert to off-line coating at our release liner operations to continue to serve our customers. A related net special item charge of €55 million has been recorded in the period.

In June 2018, we completed the sale of a flat sack kraft paper mill in Pine Bluff, Arkansas (US) with 130,000 tonnes of annual production capacity.

Fibre Packaging

(Restated)

(Restated)

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Six months ended 31 December 2017

Segment revenue

1,067

1,031

1,024

Underlying EBITDA

105

101

93

Underlying operating profit

65

61

51

Capital expenditure

53

47

68

Net segment assets

1,146

1,065

1,077

Underlying EBITDA margin

9.8%

9.8%

9.1%

ROCE

11.2%

13.0%

11.2%

Underlying EBITDA of €105 million was up 4% on the comparable prior year period, with higher average selling prices more than offsetting higher costs and negative currency effects.

Corrugated Packaging made very good progress in implementing price increases required to compensate for the significantly higher paper input costs and negative currency effects, while it continues to benefit from growing e-commerce activity. Sales volumes were stable on a strong comparable prior year period. The business remains focused on continuous improvements to reduce conversion costs and further enhance its product offering, quality and service to customers.

Industrial Bags volumes were up 3.6% on the comparable prior year period, with strong growth in Iberia, emerging Europe, Middle East and West Africa more than offsetting weaker US volumes. As previously reported, annual contracts for 2018 were finalised during the first quarter, with price increases implemented that largely reflected the full impact on the cost base of the paper price increases that took effect from the beginning of the year. Further price increases are being negotiated following recent increases in paper input costs, albeit the ability to influence pricing in the short term is limited due to the prevalence of annual contracts. The business benefited from good cost management and restructuring measures to optimise the plant network in Europe and North America that were implemented during 2017. Industrial Bags, together with the other Fibre Packaging businesses, is working closely with Consumer Packaging to develop paper based consumer packaging solutions.

In June 2018, we acquired an industrial bags plant in Giza near Cairo (Egypt), for a total consideration of EGP510 million (€25 million) on a debt and cash-free basis. This acquisition bolsters our leading position in the fast growing Middle East industrial bags market and will allow us to better serve our customers in the region. We have also agreed to acquire a control position in another plant near Cairo which is expected to complete in the third quarter.

Consumer Packaging

(Restated)

(Restated)

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Six months ended 31 December 2017

Segment revenue

822

839

807

Underlying EBITDA

103

109

113

Underlying operating profit

63

64

70

Special items charge

(27)

—

(49)

Capital expenditure

38

36

55

Net segment assets

1,295

1,327

1,326

Underlying EBITDA margin

12.5%

13.0%

14.0%

ROCE

10.4%

9.8%

10.4%

Underlying EBITDA of €103 million was down on the comparable prior year period, as steady underlying performance was offset by negative currency and one-off effects.

The business benefited from good growth in selected value-added segments in technical films and consumer goods packaging, and the programme launched in the second half of 2017 to restructure the cost base. Short-term performance was held back by declining volumes in personal care components and certain weaker plants in the portfolio.

In continuing to drive performance by aligning capacity to current market requirements, we are progressing with the restructuring of our UK operations, including the closure of our plant in Scunthorpe in the second half of the year. A related net special item charge of €24 million was recorded in the period.

We continue to drive various commercial excellence and innovation initiatives, aimed at improving our product and service offering to customers. As previously disclosed, our commitment to work collaboratively with other stakeholders led us to join the Ellen MacArthur Foundation New Plastics Economy Initiative in 2017. We are actively working with our customers, suppliers and recycling companies to find innovative solutions that improve the sustainability of packaging. We believe flexible packaging, which typically uses 70% less plastic than rigid based alternatives, can contribute towards a global sustainable plastics system, based on circular economy principles. Furthermore, we continue to seek opportunities to leverage our customer relationships and product know-how across our packaging businesses, being in a unique position as a leading producer of both plastics and paper based solutions.

Uncoated Fine Paper

(Restated)

(Restated)

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Six months ended 31 December 2017

Segment revenue

941

947

885

Underlying EBITDA

230

240

224

Underlying operating profit

168

174

163

Special item charge

(18)

—

(15)

Capital expenditure

84

49

73

Net segment assets

1,523

1,508

1,515

Underlying EBITDA margin

24.4%

25.3%

25.3%

ROCE

26.5%

27.1%

26.6%

Our Uncoated Fine Paper business continued to perform strongly, with underlying EBITDA of €230 million and ROCE of 26.5%. Underlying EBITDA was down 4% on the comparable prior year period as higher average selling prices were offset by higher costs, the impact of the extended shut at Richards Bay, a lower fair value gain and negative currency effects, mainly from a weaker Russian rouble and US dollar compared to the prior year period.

Uncoated fine paper sales volumes were higher than the prior year period despite the ongoing structural decline in overall market demand in mature markets, as we continue to benefit from our superior cost positioning and emerging market exposure. Average benchmark European uncoated fine paper selling prices were up 6% on the comparable prior year period and 3% up sequentially, following the implementation of price increases through the course of 2017 and at the end of March 2018. As a result of continued cost pressures, we implemented price increases in July of between 2% and 6% for our range of uncoated fine papers in Europe with a further price increase of up to 6% announced for implementation in September.

Variable input costs increased due to higher wood, chemical and energy costs, while fixed costs were higher due to domestic inflationary cost pressures and maintenance shuts; partly compensated by our ongoing cost reduction initiatives. The forestry fair value gain of €13 million was down €7 million on the prior year period.

Due to the declining margins on unintegrated paper production following the rapid rise in hardwood pulp input costs, we will cease production at one of our uncoated fine paper machines at Merebank (South Africa) during the second half, which was operating at 70,000 tonnes per annum production capacity, leading to a net special item charge of €18 million in the period.

To enhance the security of wood supply to our Richards Bay mill and improve cost competitiveness, we acquired around 11,000 hectares of well-located forest plantations in KwaZulu-Natal (South Africa) in May 2018 for ZAR408 million (€27 million) on a debt and cash-free basis.

During the period we completed a planned maintenance shut at our Syktyvkar mill and extended shut at our facility in Richards Bay. Maintenance shuts at our Ruzomberok and Neusiedler (Austria) mills are scheduled for the second half of the year. In line with previous years, the second half is also expected to be impacted by a seasonal slowdown in demand during the European summer months.

Tax

The underlying effective tax rate in the first half was 22%, above the comparable prior year period and in line with our expectation as previously disclosed. The increase in tax rate is partly due to the full utilisation in 2017 of key tax incentives in Poland. In addition, in the prior year we recognised deferred tax assets related to previously unrecognised tax losses.

Special items

The net special item charge in the period of €100 million before tax (2017: net gain €5 million) comprises the following by business:

• Packaging Paper

Discontinuation of in-line silicone coating production at Steti. Restructuring costs of €8 million and related impairment of assets of €47 million were recognised.

• Consumer Packaging

Restructuring of operations, primarily in the United Kingdom. Restructuring costs of €9 million and impairment of assets of €15 million were recognised.

Following the discontinuation of in-line silicone coating production at Steti, restructuring costs of €3 million and related impairment of €2 million, offset by reversal of impairment of assets of €2 million, were recognised.

• Uncoated Fine Paper

Closure of an uncoated fine paper machine at Merebank. Restructuring costs of €13 million and related impairment of assets of €5 million were recognised.

Further detail is provided in note 5 of the condensed combined and consolidated financial statements.

Cash flow

Cash generated from operations of €722 million (2017: €612 million), reflects the continued strong cash generating capacity of the Group.

Working capital at 30 June 2018 was 14.3% as a percentage of annualised revenue (30 June 2017: 13.4%), higher than the year end level of 12.7%. This reflects the usual seasonal uptick in the first half of the year compounded by increasing average selling prices, giving rise to a net cash outflow of €148 million in the period (2017: €141 million).

During the period we completed the acquisition of Powerflute, an industrial bags plant in Egypt and forest plantations in South Africa for a total consideration, including net debt assumed of €415 million. Further significant cash outflows from financing activities included the payment of the 2017 final ordinary dividend (€207 million) and the 2017 special dividend in May 2018 (€484 million).

Capital investments

During the first half of the year we invested €347 million (2017: €254 million) in our property, plant and equipment. Our recently completed capital projects made good contributions during the period.

We are making good progress with our major capital expenditure programme, totalling over €750 million and securing future growth:

• The modernisation of our Steti mill to replace the recovery boiler, rebuild the fibre lines and debottleneck the existing packaging paper machines is on track to start-up towards the end of the year.

• Our investment in a new 300,000 tonne per annum kraft top white machine and related pulp mill upgrade at our Ruzomberok mill is progressing well. Work on the pulp mill upgrade is ongoing, with start-up expected in late 2019. The investment in the paper machine remains subject to obtaining necessary permitting with start-up expected in 2020.

• As part of our plan to maintain Syktyvkar's competitiveness and increase saleable production by around 100,000 tonnes per annum in the medium term, we are investing to debottleneck production and avoid unplanned shutdowns.

• We continue to invest in our Fibre Packaging and Consumer Packaging businesses to enhance our product and service offering.

Our major capital projects in Czech Republic, Slovakia and Russia will increase our current saleable pulp and paper production by around 9% when in full operation.

Given the approved project pipeline and in the absence of any other major investments, our capital expenditure is expected to be in line with our previous estimate of €700-800 million per annum in 2018 and 2019 as expenditure on these large projects accelerates.

Treasury and borrowings

Net debt at 30 June 2018 was €2,450 million, up from €1,532 million at 31 December 2017, mainly as a consequence of the payment of the 2017 special dividend at the end of May (€484 million) and the completion of acquisitions totalling €415 million in the period. At 30 June 2018, the net debt to 12-month trailing underlying EBITDA ratio was 1.5 times.

In April 2018, we issued a 1.625% €600 million Eurobond with an 8-year tenor under our Euro Medium Term Note Programme, thereby extending the Group’s maturity profile and maintaining our strong liquidity. At 30 June 2018, we had €2.5 billion of committed borrowing facilities of which €429 million were undrawn. The weighted average maturity of our committed debt facilities is approximately 4.6 years.

Finance charges of €40 million were below those of the comparable prior year period (€47 million). Average net debt was up on the comparable prior year period, while the average effective interest rate for the period was lower at 4.3% (six months ended 30 June 2017: 5.5%), primarily due to the redemption of the 5.75% €500 million Eurobond on maturity in April 2017.

The Boards’ aim is to offer shareholders long-term dividend growth within a targeted dividend cover range of two to three times underlying earnings over the business cycle.

An interim ordinary dividend of 21.45 euro cents per share has been declared by the directors and will be paid on 14 September 2018 to those shareholders on the register of Mondi plc on 24 August 2018. An equivalent South African rand interim ordinary dividend will be paid on 14 September 2018 to shareholders on the register of Mondi Limited on 24 August 2018. The dividend will be paid from distributable reserves of Mondi Limited and Mondi plc.

Outlook

The trading environment remains positive going into the second half of the year, with pricing in key fibre based product segments remaining supportive. The second half of the year will be impacted by the usual seasonal downturn in Uncoated Fine Paper. We also expect continued pressure on the cost base across the Group, mitigated by our ongoing proactive and comprehensive cost reduction programmes.

Mondi is uniquely positioned to develop sustainable fibre and plastic based packaging solutions. With our robust business model, focus on leveraging key industry trends of sustainability, e-commerce and convenience, and culture of driving performance, we remain confident of sustaining our track record of delivering value accretive growth.

Reorganisation of business units

Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and operational coordination across the fibre based packaging value chain. The changes to the Group’s business units, and consequently to the Group’s segmental reporting, are as follows:

• Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging; and

• there were no changes to the Consumer Packaging or Uncoated Fine Paper business units.

The Group’s restated segmental reporting for the six months ended 30 June 2018 and the comparative reporting periods for the six months ended 30 June 2017 and the year ended 31 December 2017 are disclosed later in this document. The reorganisation has no impact on the overall Group result.

Principal risks and uncertainties

The Boards are responsible for the effectiveness of the Group’s risk management activities and internal control processes. They have put procedures in place for identifying, evaluating, and managing the significant risks that the Group faces. In combination with the audit committee, at the beginning of 2018, the Boards have conducted a robust assessment of the principal risks to which Mondi is exposed and they are satisfied that the Group has effective systems and controls in place to manage its key risks within the risk tolerance levels established. There have been no significant changes to the principal risks since 31 December 2017 as described on pages 34 to 40 of the Group’s Integrated report and financial statements 2017.

Risk management is by nature a dynamic and ongoing process. Our approach is flexible to ensure that it remains relevant at all levels of the business, and dynamic to ensure we can be responsive to changing business conditions. This is particularly important given the diversity of the Group’s locations, markets and production processes. Our internal control environment is designed to safeguard the assets of the Group and to provide reasonable assurance that the Group’s business objectives will be achieved.

Strategic risks

The industries and geographies in which we operate expose us to specific long-term risks which are accepted by the Boards as a consequence of the Group’s chosen strategy and operating footprint.

While there have been no significant changes in our strategic risk exposure during the year, we continue to monitor recent capacity announcements, the developments in the process as the UK seeks to exit the European Union, the stability of the Eurozone and the increasing use of trade tariffs and economic sanctions.

The executive committee and Boards monitor our exposure to these risks and evaluate investment decisions against our overall exposures so that our strategic capital investments and acquisitions take advantage of the opportunities arising from our deliberate exposure to such risks.

Our principal strategic risks relate to the following:

• Industry productive capacity

• Product substitution

• Fluctuations and variability in selling prices or gross margins

• Country risk

Financial risks

We aim to maintain an appropriate capital structure and to conservatively manage our financial risk exposures in compliance with all laws and regulations.

A low residual risk tolerance is demonstrated through our focus on operational excellence, investment in our people and commitment to the responsible use of resources.

Our investments to improve our energy efficiency, engineer out our most significant safety risks, improve operating efficiencies, and renew our equipment continue to reduce the likelihood of operational risk events. However, the potential impact of any such event remains unchanged.

Our principal operational risks relate to the following:

• Cost and availability of raw materials

• Energy security and related input costs

• Technical integrity of our operating assets

• Environmental impact

• Employee and contractor safety

• Attraction and retention of key skills and talent

Compliance risks

We have a zero tolerance approach to compliance risks. Our strong culture and values, emphasised in every part of our business with a focus on integrity, honesty, and transparency, underpins our approach.

Our principal compliance risks relate to the following:

• Reputational risk

• Information technology risk

Going concern

The directors have reviewed the Group’s current financial position, performance expectations for the next twelve months, and the significant risks which may impact the Group’s performance in the near term. These include an evaluation of the current macroeconomic environment and reasonably possible changes in the Group’s trading performance.

The Group’s financial position, cash flows, liquidity position and borrowing facilities are described in the financial statements. At 30 June 2018, Mondi had €429 million of undrawn, committed debt facilities. The Group’s debt facilities have maturity dates of between 1 and 8 years, with a weighted average maturity of 4.6 years.

Based on our evaluation the Boards considered it appropriate to prepare the financial statements on the going concern basis.

Accordingly, the Group continues to adopt the going concern basis in preparing the condensed combined and consolidated financial statements.

Contact details

Mondi Group

Peter Oswald

+43 1 79013 4000

Andrew King

+44 193 282 6321

Sara Sizer

+43 664 244 9994

Clara Valera

+44 193 282 6357

FTI Consulting

Richard Mountain

+44 790 968 4466

Conference call dial-in and webcast details

Please see below details of our dial-in conference call and webcast that will be held at 09:00 (UK) and 10:00 (SA) today.

A video recording of the presentation will be available on Mondi’s website during the afternoon of 3 August 2018.

Directors’ responsibility statement

The directors confirm that to the best of their knowledge:

• the condensed combined and consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards and in particular with International Accounting Standard 34, ‘Interim Financial Reporting’;

• the half-yearly results announcement includes a fair review of the significant events during the six months ended 30 June 2018 and a description of the principal risks and uncertainties for the remaining six months of the year ending 31 December 2018;

• there have been no significant individual related party transactions during the first six months of the financial year; and

• there have been no significant changes in the Group’s related party relationships from that reported in the Integrated report and financial statements 2017.

The Group’s condensed combined and consolidated financial statements, and related notes, were approved by the Boards and authorised for issue on 2 August 2018 and were signed on their behalf by:

Peter Oswald Andrew King

Director Director

2 August 2018

Independent review report of PricewaterhouseCoopers LLP to Mondi plc and PricewaterhouseCoopers Inc. to the shareholders of Mondi Limited

Mondi plc and Mondi Limited operate under a dual listed company structure as a single economic entity. The “Group” consists of Mondi plc, Mondi Limited and their respective subsidiaries. The Group financial statements combine and consolidate the financial statements of the Group and include the Group’s share of joint arrangements and associates.

PricewaterhouseCoopers LLP is the appointed auditor of Mondi plc, a company incorporated in the United Kingdom in terms of the United Kingdom Companies Act 2006. PricewaterhouseCoopers Inc. is the appointed auditor of Mondi Limited, a company incorporated in South Africa in terms of the Companies Act of South Africa. PricewaterhouseCoopers LLP and PricewaterhouseCoopers Inc. reviewed the interim financial statements of the Group.

For the purpose of this report, the terms ‘we’ and ‘our’ denote PricewaterhouseCoopers LLP in relation to UK legal, professional and regulatory responsibilities and reporting obligations to Mondi plc and PricewaterhouseCoopers Inc. in relation to South African legal, professional and regulatory responsibilities and reporting obligations to the shareholders of Mondi Limited. When we refer to PricewaterhouseCoopers LLP or PricewaterhouseCoopers Inc. such reference is to that specific entity to the exclusion of the other.

Report on the interim financial statements

Conclusion of PricewaterhouseCoopers LLP for Mondi plc

We have reviewed Mondi plc and Mondi Limited's condensed combined and consolidated half-yearly financial statements (the "interim financial statements") in the half-yearly results for the six months ended 30 June 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

Conclusion of PricewaterhouseCoopers Inc. for Mondi Limited

We have reviewed Mondi plc and Mondi Limited’s condensed combined and consolidated half-yearly financial statements (the "interim financial statements") in the half-yearly results for the six months ended 30 June 2018. Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as issued by the International Accounting Standards Board (IASB), the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the South African Financial Reporting Standards Council and the provisions of the Companies Act of South Africa.

What we have reviewed

The interim financial statements comprise:

• the condensed combined and consolidated statement of financial position as at 30 June 2018;

• the condensed combined and consolidated income statement and the condensed combined and consolidated statement of comprehensive income for the period then ended;

• the condensed combined and consolidated statement of cash flows for the period then ended;

• the condensed combined and consolidated statement of changes in equity for the period then ended; and

• the explanatory notes to the interim financial statements.

The interim financial statements included in the half-yearly results have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and as issued by the IASB and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the South African Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.

As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards as adopted by the European Union and as issued by the IASB.

Responsibilities for the interim financial statements and the review

Responsibilities of the directors of Mondi plc and Mondi Limited

The half-yearly results, including the interim financial statements, are the responsibility of, and have been approved by, the directors. The directors are responsible for the preparation and presentation of the interim financial statements in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and as issued by the IASB, the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the South African Financial Reporting Standards Council and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error.

Our responsibilities

Our responsibility is to express a conclusion on the interim financial statements based on our review.

What a review of interim financial statements involves

PricewaterhouseCoopers LLP conducted their review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board for use in the United Kingdom.

PricewaterhouseCoopers Inc. conducted their review in accordance with International Standard on Review Engagements (ISRE) 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ as issued by the International Auditing and Assurance Standards Board. ISRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are not prepared in all material respects in accordance with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical requirements. A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement.

A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with either International Standards on Auditing (UK) or International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on these interim financial statements.

As part of our review, we have read the other information contained in the half-yearly results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Use of the review report of PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP have prepared this review report, including their conclusion, for and only for Mondi plc for the purpose of the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority and for no other purpose. PricewaterhouseCoopers LLP do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

PricewaterhouseCoopers LLP PricewaterhouseCoopers Inc.

Chartered Accountants Director: JFM Kotzé

London Registered Auditor

2 August 2018 Waterfall

2 August 2018

The maintenance and integrity of the Mondi Group website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the interim financial statements since they were initially presented on the website.

Legislation in the United Kingdom and South Africa governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Condensed combined and consolidated income statement

for the six months ended 30 June 2018

Restated1

Restated1

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

€ million

Notes

Underlying

Special items (Note 5)

Total

Underlying

Special items (Note 5)

Total

Underlying

Special items (Note 5)

Total

Group revenue

3,727

—

3,727

3,582

—

3,582

7,096

—

7,096

Materials, energy and consumables used

(1,766)

—

(1,766)

(1,744)

—

(1,744)

(3,452)

—

(3,452)

Variable selling expenses

(266)

—

(266)

(275)

—

(275)

(525)

—

(525)

Gross margin

1,695

—

1,695

1,563

—

1,563

3,119

—

3,119

Maintenance and other indirect expenses

(160)

—

(160)

(150)

—

(150)

(319)

—

(319)

Personnel costs

(528)

(8)

(536)

(544)

—

(544)

(1,053)

(9)

(1,062)

Other net operating expenses

(155)

(25)

(180)

(139)

5

(134)

(265)

(14)

(279)

Depreciation, amortisation and impairments

(222)

(67)

(289)

(227)

—

(227)

(453)

(38)

(491)

Operating profit

630

(100)

530

503

5

508

1,029

(61)

968

Net profit from equity accounted investees

—

—

—

—

—

—

1

—

1

Total profit from operations and equity accounted investees

630

(100)

530

503

5

508

1,030

(61)

969

Net finance costs

7

(40)

—

(40)

(47)

—

(47)

(85)

—

(85)

Profit before tax

590

(100)

490

456

5

461

945

(61)

884

Tax (charge)/credit

8

(132)

19

(113)

(87)

—

(87)

(181)

8

(173)

Profit for the period

458

(81)

377

369

5

374

764

(53)

711

Attributable to:

Non-controlling interests

26

26

25

25

43

43

Shareholders

432

351

344

349

721

668

Earnings per share (EPS) attributable to shareholders

euro cents

Basic EPS

9

72.5

72.1

137.9

Diluted EPS

9

72.4

72.0

137.8

Basic underlying EPS

9

89.2

71.0

148.9

Diluted underlying EPS

9

89.1

71.0

148.8

Basic headline EPS

9

85.1

72.5

145.4

Diluted headline EPS

9

85.0

72.4

145.3

Note:

1 The audited annual financial statements for the year ended 31 December 2017 and the reviewed interim financial statements for the six months ended 30 June 2017 were restated due to a change in accounting policy which has been disclosed in notes 2a and 2b of these condensed combined and consolidated financial statements. The restatements to the comparative information have not been audited.

Condensed combined and consolidated statement of comprehensive income

for the six months ended 30 June 2018

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Profit for the period

377

374

711

Items that have been or may subsequently be reclassified to the condensed combined and consolidated income statement

Cash flow hedges

—

2

—

Exchange differences on translation of foreign operations

(154)

(45)

(71)

Share of other comprehensive expense of equity accounted investees

—

(2)

(2)

Items that will not subsequently be reclassified to the condensed combined and consolidated income statement

Remeasurements of retirement benefits plans

4

14

9

Tax effect thereof

—

(3)

(1)

Other comprehensive expense for the period

(150)

(34)

(65)

Total comprehensive income for the period

227

340

646

Attributable to:

Non-controlling interests

23

22

41

Shareholders

204

318

605

Condensed combined and consolidated statement of financial position

as at 30 June 2018

Restated

Restated

Restated

€ million

Notes

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

As at 1 January 2017

Property, plant and equipment

4,187

3,994

4,128

3,961

Goodwill

932

696

698

681

Intangible assets

101

124

111

120

Forestry assets

11

321

312

325

316

Other non-current assets

63

62

59

62

Total non-current assets

5,604

5,188

5,321

5,140

Inventories

921

879

867

850

Trade and other receivables

1,265

1,146

1,106

1,049

Cash and cash equivalents

16b

54

104

38

404

Other current assets

35

29

44

41

Total current assets

2,275

2,158

2,055

2,344

Total assets

7,879

7,346

7,376

7,484

Short-term borrowings

13

(305)

(351)

(291)

(673)

Trade and other payables

(1,121)

(1,065)

(1,074)

(1,100)

Other current liabilities

(206)

(158)

(184)

(167)

Total current liabilities

(1,632)

(1,574)

(1,549)

(1,940)

Medium and long-term borrowings

13

(2,206)

(1,434)

(1,280)

(1,309)

Net retirement benefits liability

(227)

(223)

(232)

(240)

Deferred tax liabilities

(241)

(251)

(248)

(260)

Other non-current liabilities

(57)

(70)

(60)

(70)

Total non-current liabilities

(2,731)

(1,978)

(1,820)

(1,879)

Total liabilities

(4,363)

(3,552)

(3,369)

(3,819)

Net assets

3,516

3,794

4,007

3,665

Equity

Combined share capital and stated capital

542

542

542

542

Retained earnings and other reserves

2,646

2,948

3,141

2,820

Total attributable to shareholders

3,188

3,490

3,683

3,362

Non-controlling interests in equity

328

304

324

303

Total equity

3,516

3,794

4,007

3,665

The Group’s condensed combined and consolidated financial statements, and related notes 1 to 21, were approved by the Boards and authorised for issue on 2 August 2018 and were signed on their behalf by:

Peter Oswald Andrew King

Director Director

Mondi Limited company registration number: 1967/013038/06

Mondi plc company registered number: 6209386

Condensed combined and consolidated statement of changes in equity

for the six months ended 30 June 2018

€ million

Equity attributable to shareholders

Non-controlling interests

Total
equity

At 1 January 2017, as previously reported (Audited)

3,392

304

3,696

Impact of change in accounting policy

(30)

(1)

(31)

Restated balance at 1 January 2017

3,362

303

3,665

Total comprehensive income for the period (Restated)

318

22

340

Dividends

(180)

(21)

(201)

Purchases of treasury shares

(20)

—

(20)

Other

10

—

10

Restated balance at 30 June 2017

3,490

304

3,794

Total comprehensive income for the period (Restated)

287

19

306

Dividends

(93)

(1)

(94)

Purchases of treasury shares

(4)

—

(4)

Other

3

2

5

Restated balance at 31 December 2017

3,683

324

4,007

Total comprehensive income for the period

204

23

227

Dividends

(691)

(17)

(708)

Purchases of treasury shares

(14)

—

(14)

Other

6

(2)

4

At 30 June 2018

3,188

328

3,516

Equity attributable to shareholders

Restated

Restated

Restated

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

As at 1 January 2017

Combined share capital and stated capital

542

542

542

542

Treasury shares

(24)

(26)

(27)

(24)

Retained earnings

3,220

3,351

3,568

3,187

Cumulative translation adjustment reserve

(756)

(580)

(604)

(536)

Post-retirement benefits reserve

(67)

(64)

(71)

(75)

Other reserves

273

267

275

268

Total

3,188

3,490

3,683

3,362

Condensed combined and consolidated statement of cash flows

for the six months ended 30 June 2018

Restated

Restated

€ million

Notes

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Cash flows from operating activities

Cash generated from operations

16a

722

612

1,363

Dividends received from other investments

—

—

1

Income tax paid

(110)

(73)

(151)

Net cash generated from operating activities

612

539

1,213

Cash flows from investing activities

Investment in property, plant and equipment

(347)

(254)

(611)

Investment in forestry assets

(28)

(25)

(49)

Acquisition of subsidiaries, net of cash and cash equivalents

15

(383)

(34)

(37)

Other investing activities

15

2

3

Net cash used in investing activities

(743)

(311)

(694)

Cash flows from financing activities

Proceeds from medium and long-term borrowings

354

154

25

Repayment of medium and long-term borrowings

—

(8)

(11)

Proceeds from Eurobonds

600

—

—

Repayment of Eurobonds

—

(500)

(500)

Net proceeds from/(repayment of) short-term borrowings

9

104

(4)

Interest paid

(32)

(59)

(97)

Dividends paid to shareholders

10

(691)

(180)

(273)

Dividends paid to non-controlling interests

(17)

(21)

(22)

Purchases of treasury shares

(14)

(20)

(24)

Net cash outflow from derivatives

(24)

(41)

(47)

Other financing activities

(8)

—

(5)

Net cash generated from/(used in) financing activities

177

(571)

(958)

Net increase/(decrease) in cash and cash equivalents

46

(343)

(439)

Cash and cash equivalents at beginning of period

(66)

377

377

Cash movement in the period

16c

46

(343)

(439)

Effects of changes in foreign exchange rates

16c

7

(2)

(4)

Cash and cash equivalents at end of period

16b

(13)

32

(66)

Notes to the condensed combined and consolidated financial statements
for the six months ended 30 June 2018

1 Basis of preparation

The Group has two separate legal parent entities, Mondi Limited and Mondi plc, which operate under a dual listed company (DLC) structure. The substance of the DLC structure is such that Mondi Limited and its subsidiaries, and Mondi plc and its subsidiaries, operate together as a single economic entity through a sharing agreement, with neither parent entity assuming a dominant role. Accordingly, Mondi Limited and Mondi plc are reported on a combined and consolidated basis as a single reporting entity.

The Group’s condensed combined and consolidated half-yearly financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34, ‘Interim Financial Reporting’; the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee; Financial Pronouncements as issued by the Financial Reporting Council; and the requirements of the Companies Act of South Africa 2008. They should be read in conjunction with the Group’s Integrated report and financial statements 2017, prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

There are no differences for the Group in applying IFRS as issued by the IASB and IFRS as adopted by the European Union (EU) and, therefore, the Group also complies with Article 4 of the EU IAS Regulation.

The condensed combined and consolidated financial statements have been prepared on a going concern basis as discussed in the commentary under the heading ‘Going concern’.

The financial information set out above does not constitute statutory accounts as defined by section 434 of the UK Companies Act 2006. A copy of the statutory accounts for the year ended 31 December 2017 has been delivered to the Registrar of Companies. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the UK Companies Act 2006.

These condensed combined and consolidated financial statements have been prepared on the historical cost basis, except for the fair valuing of financial instruments and forestry assets.

The preparation of these condensed combined and consolidated financial statements includes the use of estimates and assumptions. Although the estimates used are based on management's best information about current circumstances and future events and actions, actual results may differ from these estimates.

In preparing these condensed combined and consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Group’s Integrated report and financial statements 2017, with the exception of changes in estimates that are required in determining the provision for income taxes for an interim period and the estimates required under the new accounting standards as described in note 2a.

These financial statements have been prepared under the supervision of the Group Chief Financial Officer, Andrew King CA (SA).

2a Accounting policies

The same accounting policies and alternative performance measures (APMs), methods of computation and presentation have been followed in the preparation of the condensed combined and consolidated financial statements for the six months ended 30 June 2018 as were applied in the preparation of the Group’s annual financial statements for the year ended 31 December 2017, except as set out below.

The new Standards IFRS 9, 'Financial instruments' and IFRS 15, 'Revenue from contracts with customers' (including amendment), are effective and have been adopted, together with the early adoption of IFRS 16, 'Leases', for the financial year beginning on 1 January 2018. The accounting policies have been updated to reflect the changes required by the new accounting standards. The transitional options selected are detailed below.

A number of further amendments to IFRS became effective for the financial period beginning on 1 January 2018, but the Group did not have to change its accounting policies or make material retrospective adjustments as a result of adopting these new amendments.

Taxes on income in the interim period are accrued using the tax rate that would be applicable to expected total annual profits or losses.

Financial instruments

Financial assets and financial liabilities are recognised in the Group’s condensed combined and consolidated statement of financial position when the Group becomes party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in the condensed combined and consolidated income statement.

Cash and cash equivalents (note 16b)

Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid investments of a maturity of three months or less from the date of acquisition that are readily convertible to a known amount of cash and that are subject to an insignificant risk of changes in value. Bank overdrafts are shown within short-term borrowings in current liabilities in the condensed combined and consolidated statement of financial position. Cash and cash equivalents presented in the condensed combined and consolidated statement of cash flows and in net debt (note 16c) are net of overdrafts.

Trade receivables

Trade receivables are initially recognised at their fair value and are subsequently measured at amortised cost using the effective interest rate method, less allowance for impairments.

Impairment of trade receivables

A simplified lifetime Expected Credit Loss (ECL) model is used to assess trade receivables for impairment. ECL is the present value of all cash shortfalls over the expected life of a trade receivable. Expected credit losses are based on historical loss experience on trade receivables, adjusted to reflect information about current economic conditions and reasonable and supportable forecasts of future economic conditions. At the date of initial recognition, the credit losses expected to arise over the lifetime of a trade receivable are recognised as an impairment.

Trade payables

Trade payables are initially recognised at fair value and are subsequently carried at amortised cost using the effective interest rate method.

Borrowings (note 13)

Interest bearing loans and overdrafts are initially recognised at fair value, net of direct transaction costs. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds, net of transaction costs, and the redemption value is recognised in the condensed combined and consolidated income statement over the term of the borrowings using the effective interest rate method.

Borrowing costs (note 7)

Interest on borrowings directly relating to the acquisition, construction or production of qualifying assets is capitalised until such time as the assets are substantially ready for their intended use or sale. Where funds have been borrowed specifically to finance a project, the amount capitalised represents the actual borrowing costs incurred. Where the funds used to finance a project form part of general borrowings, the amount capitalised is calculated using a weighted average of rates applicable to relevant general borrowings of the Group during the construction period.

All other borrowing costs are recognised in the condensed combined and consolidated income statement in the period in which they are incurred.

Derivative financial instruments and hedge accounting

The Group enters into forward, option and swap contracts in order to hedge its exposure to foreign exchange, interest rate and commodity price risks.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and subsequently measured at fair value in the condensed combined and consolidated statement of financial position within derivative financial instruments, and are classified as current or non-current depending on the maturity of the derivative.

Changes in the fair value of derivative financial instruments that are not formally designated in hedge relationships are recognised immediately in the condensed combined and consolidated income statement and are classified within operating profit or net finance costs, depending on the type of risk to which the derivative relates.

Cash flow hedges

The effective portion of changes in the fair value of derivative financial instruments that are designated as hedges of future cash flows are recognised directly in other comprehensive income and accumulated in equity. The gain or loss relating to the ineffective portion is recognised immediately in the condensed combined and consolidated income statement. If the cash flow hedge of a forecast transaction results in the recognition of a non-financial asset then, at the time the asset is recognised, the associated gains or losses on the derivative that had previously been recognised in the Group’s cash flow hedge reserve in equity are included in the initial measurement of the asset. For hedges that do not result in the recognition of a non-financial asset, amounts deferred in the Group’s cash flow hedge reserve in equity are recognised in the condensed combined and consolidated income statement in the same period in which the hedged item affects profit and loss on a proportionate basis.

Hedge accounting is discontinued when the hedge relationship is revoked or the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss deferred in equity remains in equity and is recognised in the condensed combined and consolidated income statement when the forecast transaction is ultimately recognised. If a hedge transaction is no longer expected to occur, the net cumulative gain or loss deferred in equity is included immediately in the condensed combined and consolidated income statement.

Transitional application

The Group has adopted IFRS 9, 'Financial Instruments', on 1 January 2018 and in accordance with the transitional provisions in IFRS 9, comparative figures have not been restated.

Revenue from contracts with customers

Sale of goods (note 4)

Revenue is recognised from the sale of goods and is measured at the amount of the transaction price received in exchange for transferring goods. The transaction price is the expected consideration to be received, to the extent that it is highly probable that there will not be a significant reversal of revenue in future, after deducting discounts, volume rebates, value added tax and other sales taxes. When the period of time between delivery of goods and subsequent payment by the customer is less than one year, no adjustment for a financing component is made.

Control of the goods is passed when title and insurance risk have passed to the customer, which is typically when the goods have been delivered to a contractually agreed location.

The incremental costs of obtaining a contract are recognised as an expense when the period of amortisation over which the costs would have been recognised is one year or less. If not, these costs are capitalised and amortised on a basis consistent with the transfer of goods to the customer to which the asset relates.

Transitional application

The Group has elected to adopt IFRS 15, 'Revenue from contracts with customers', with the retrospective transitional option per IFRS 15 C3 (a), in accordance with IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors', subject to expedients. The Group has used the following practical expedients as permitted by IFRS 15:

• for completed contracts that began and ended in the same annual reporting period, no restatement has been done;

• for completed contracts that have variable consideration, the transaction price at the date on which the contract was completed has been used; and

• for the comparative 2017 periods, the amount of the transaction price allocated to remaining performance obligations is not disclosed.

Leases (note 12)

To the extent that a right-of-control exists over an asset subject to a lease, with a lease term exceeding one year, a right-of-use asset, representing the Group’s right to use the underlying leased asset, and a lease liability representing the Group’s obligation to make lease payments are recognised in the condensed combined and consolidated statement of financial position at the commencement of the lease.

The right-of-use asset is measured initially at cost and includes the amount of initial measurement of the lease liability, any initial direct costs incurred, including advance lease payments, and an estimate of the dismantling, removal and restoration costs required in terms of the lease. Depreciation is charged to the condensed combined and consolidated income statement so as to depreciate the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lease term shall include the period of an extension option where it is reasonably certain that the option will be exercised. Where the lease contains a purchase option the asset is written-off over the useful life of the asset when it is reasonably certain that the purchase option will be exercised.

The lease liability is measured at the present value of the future lease payments, including variable lease payments that depend on an index and the exercise price of purchase options where it is reasonably certain that the option will be exercised, discounted using the interest rate implicit in the lease, if readily determinable. If the rate cannot be readily determined, the lessee’s incremental borrowing rate is used. Finance charges are recognised in the condensed combined and consolidated income statement over the period of the lease.

Lease expenses for leases with a duration of one year or less and low-value assets are charged to the condensed combined and consolidated income statement when incurred. Low-value assets are based on qualitative and quantitative criteria.

Transitional application

The Group has elected to early adopt IFRS 16, 'Leases', with effect from 1 January 2018, with the retrospective transitional option per IFRS 16 C5 (a), applying IAS 8, 'Accounting Policies, Changes in Accounting Estimates and Errors'. The Group has elected to apply the practical expedient per IFRS 16 C3, such that the IFRS 16 definition of a lease would only be applied to assess whether contracts entered into after the date of initial application are, or contain leases. All contracts previously assessed not to contain leases have not been reassessed.

Alternative Performance Measures

The Group presents certain measures of financial performance, position or cash flows in the condensed combined and consolidated financial statements that are not defined or specified according to IFRS. These measures, referred to as Alternative Performance Measures (APMs), are defined in the Alternative Performance Measure section at the end of this document, and where relevant reconciled to IFRS in the notes to the condensed combined and consolidated financial statements, and are prepared on a consistent basis for all periods presented.

2b Restatement of comparative information

The following tables summarise the material impacts resulting from the changes in accounting policies on the Group’s condensed combined and consolidated income statement, condensed combined and consolidated statement of comprehensive income, condensed combined and consolidated statement of financial position and condensed combined and consolidated statement of cash flows. The effect of restatement is purely attributable to the adoption of the new accounting standard IFRS 16, 'Leases'.

Condensed combined and consolidated income statement

Six months ended 30 June 2017

Year ended 31 December 2017

€ million

As previously reported (Reviewed)

Effect of restatement

As restated

As previously reported (Audited)

Effect of restatement

As restated

Group revenue

3,582

—

3,582

7,096

—

7,096

Materials, energy and consumables used

(1,746)

2

(1,744)

(3,456)

4

(3,452)

Variable selling expenses

(275)

—

(275)

(525)

—

(525)

Gross margin

1,561

2

1,563

3,115

4

3,119

Maintenance and other indirect expenses

(150)

—

(150)

(319)

—

(319)

Personnel costs

(544)

—

(544)

(1,062)

—

(1,062)

Other net operating expenses

(152)

18

(134)

(313)

34

(279)

Depreciation, amortisation and impairments

(213)

(14)

(227)

(464)

(27)

(491)

Operating profit

502

6

508

957

11

968

Net profit from equity accounted investees

—

—

—

1

—

1

Total profit from operations and equity accounted investees

502

6

508

958

11

969

Net finance costs

(40)

(7)

(47)

(71)

(14)

(85)

Profit before tax

462

(1)

461

887

(3)

884

Tax charge

(87)

—

(87)

(173)

—

(173)

Profit for the period

375

(1)

374

714

(3)

711

Attributable to:

Non-controlling interests

25

—

25

43

—

43

Shareholders

350

(1)

349

671

(3)

668

The restatement had no impact on special items.

Earnings per share (EPS) attributable to shareholders

Six months ended 30 June 2017

Year ended 31 December 2017

euro cents

As previously reported (Reviewed)

Effect of restatement

As restated

As previously reported (Audited)

Effect of restatement

As restated

Basic EPS

72.3

(0.2)

72.1

138.6

(0.7)

137.9

Diluted EPS

72.2

(0.2)

72.0

138.5

(0.7)

137.8

Basic underlying EPS

71.2

(0.2)

71.0

149.5

(0.6)

148.9

Diluted underlying EPS

71.2

(0.2)

71.0

149.4

(0.6)

148.8

Basic headline EPS

72.7

(0.2)

72.5

146.0

(0.6)

145.4

Diluted headline EPS

72.6

(0.2)

72.4

145.9

(0.6)

145.3

Condensed combined and consolidated statement of comprehensive income

Six months ended 30 June 2017

Year ended 31 December 2017

€ million

As previously reported (Reviewed)

Effect of restatement

As restated

As previously reported (Audited)

Effect of restatement

As restated

Profit for the period

375

(1)

374

714

(3)

711

Items that have been or may subsequently be reclassified to the condensed combined and consolidated income statement

(46)

1

(45)

(75)

2

(73)

Items that will not subsequently be reclassified to the condensed combined and consolidated income statement

11

—

11

8

—

8

Other comprehensive expense for the period

(35)

1

(34)

(67)

2

(65)

Total comprehensive income for the period

340

—

340

647

(1)

646

Attributable to:

Non-controlling interests

22

—

22

41

—

41

Shareholders

318

—

318

606

(1)

605

Condensed combined and consolidated statement of financial position

As at 30 June 2017

As at 31 December 2017

€ million

As previously reported (Reviewed)

Effect of restatement

As restated

As previously reported (Audited)

Effect of restatement

As restated

Property, plant and equipment

3,822

172

3,994

3,962

166

4,128

Goodwill

696

—

696

698

—

698

Intangible assets

124

—

124

111

—

111

Forestry assets

312

—

312

325

—

325

Other non-current assets

61

1

62

58

1

59

Total non-current assets

5,015

173

5,188

5,154

167

5,321

Inventories

879

—

879

867

—

867

Trade and other receivables

1,146

—

1,146

1,106

—

1,106

Cash and cash equivalents

104

—

104

38

—

38

Other current assets

29

—

29

44

—

44

Total current assets

2,158

—

2,158

2,055

—

2,055

Total assets

7,173

173

7,346

7,209

167

7,376

Short-term borrowings

(326)

(25)

(351)

(267)

(24)

(291)

Trade and other payables

(1,065)

—

(1,065)

(1,074)

—

(1,074)

Other current liabilities

(158)

—

(158)

(184)

—

(184)

Total current liabilities

(1,549)

(25)

(1,574)

(1,525)

(24)

(1,549)

Medium and long-term borrowings

(1,248)

(186)

(1,434)

(1,098)

(182)

(1,280)

Net retirement benefits liability

(223)

—

(223)

(232)

—

(232)

Deferred tax liabilities

(258)

7

(251)

(255)

7

(248)

Other non-current liabilities

(70)

—

(70)

(60)

—

(60)

Total non-current liabilities

(1,799)

(179)

(1,978)

(1,645)

(175)

(1,820)

Total liabilities

(3,348)

(204)

(3,552)

(3,170)

(199)

(3,369)

Net assets

3,825

(31)

3,794

4,039

(32)

4,007

Equity

Combined share capital and stated capital

542

—

542

542

—

542

Retained earnings and other reserves

2,978

(30)

2,948

3,172

(31)

3,141

Total attributable to shareholders

3,520

(30)

3,490

3,714

(31)

3,683

Non-controlling interests in equity

305

(1)

304

325

(1)

324

Total equity

3,825

(31)

3,794

4,039

(32)

4,007

Net debt

(1,468)

(211)

(1,679)

(1,326)

(206)

(1,532)

Condensed combined and consolidated statement of cash flows

Six months ended 30 June 2017

Year ended 31 December 2017

€ million

As previously reported (Reviewed)

Effect of restatement

As restated

As previously reported (Audited)

Effect of restatement

As restated

Net cash generated from operating activities

519

20

539

1,175

38

1,213

Net cash used in investing activities

(311)

—

(311)

(694)

—

(694)

Net cash used in financing activities

(551)

(20)

(571)

(920)

(38)

(958)

Net decrease in cash and cash equivalents

(343)

—

(343)

(439)

—

(439)

3 Seasonality

The seasonality of the Group’s operations had no significant impact on the condensed combined and consolidated financial statements.

The Group’s operating segments are reported in a manner consistent with the internal reporting provided to the DLC executive committee, the chief operating decision-making body. The operating segments are managed based on the nature of the underlying products produced by those businesses and comprise four distinct segments.

Each of the reportable segments derives its income from the sale of manufactured products.

Six months ended 30 June 2018

€ million, unless otherwise stated

Packaging Paper

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate

Intersegment elimination

Total

Segment revenue

1,311

1,067

822

941

—

(414)

3,727

Internal revenue

(371)

(17)

(3)

(23)

—

414

—

External revenue

940

1,050

819

918

—

—

3,727

Underlying EBITDA

430

105

103

230

(16)

—

852

Depreciation and impairments

(75)

(37)

(31)

(61)

(1)

—

(205)

Amortisation

(4)

(3)

(9)

(1)

—

—

(17)

Underlying operating profit/(loss)

351

65

63

168

(17)

—

630

Special items

(55)

—

(27)

(18)

—

—

(100)

Operating segment assets

2,934

1,497

1,543

1,831

7

(210)

7,602

Operating segment net assets

2,568

1,146

1,295

1,523

3

—

6,535

Additions to non-current
non-financial assets

508

80

42

129

—

—

759

Capital expenditure cash payments

172

53

38

84

—

—

347

Underlying EBITDA margin (%)

32.8

9.8

12.5

24.4

—

—

22.9

Return on capital employed (%)

31.3

11.2

10.4

26.5

—

—

21.3

Average number of employees (thousands)1

5.4

7.9

5.9

6.5

0.1

—

25.8

Six months ended 30 June 2017 (Restated)

€ million, unless otherwise stated

Packaging Paper

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate

Intersegment elimination

Total

Segment revenue

1,141

1,031

839

947

—

(376)

3,582

Internal revenue

(333)

(17)

(2)

(24)

—

376

—

External revenue

808

1,014

837

923

—

—

3,582

Underlying EBITDA

301

101

109

240

(21)

—

730

Depreciation and impairments

(73)

(37)

(34)

(65)

(1)

—

(210)

Amortisation

(2)

(3)

(11)

(1)

—

—

(17)

Underlying operating profit/(loss)

226

61

64

174

(22)

—

503

Special items

5

—

—

—

—

—

5

Operating segment assets

2,405

1,406

1,570

1,822

10

(202)

7,011

Operating segment net assets

2,087

1,065

1,327

1,508

7

—

5,994

Additions to non-current
non-financial assets

125

51

79

84

—

—

339

Capital expenditure cash payments

122

47

36

49

—

—

254

Underlying EBITDA margin (%)

26.4

9.8

13.0

25.3

—

—

20.4

Return on capital employed (%)

22.8

13.0

9.8

27.1

—

—

18.5

Average number of employees (thousands)1

5.4

8.1

6.0

6.8

0.1

—

26.4

Year ended 31 December 2017 (Restated)

€ million, unless otherwise stated

Packaging Paper

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate

Intersegment elimination

Total

Segment revenue

2,292

2,055

1,646

1,832

—

(729)

7,096

Internal revenue

(642)

(34)

(5)

(48)

—

729

—

External revenue

1,650

2,021

1,641

1,784

—

—

7,096

Underlying EBITDA

639

194

222

464

(37)

—

1,482

Depreciation and impairments

(151)

(76)

(67)

(125)

(1)

—

(420)

Amortisation

(4)

(6)

(21)

(2)

—

—

(33)

Underlying operating profit/(loss)

484

112

134

337

(38)

—

1,029

Special items

3

—

(49)

(15)

—

—

(61)

Operating segment assets

2,537

1,377

1,552

1,826

17

(187)

7,122

Operating segment net assets

2,169

1,077

1,326

1,515

8

—

6,095

Additions to non-current
non-financial assets

326

125

146

191

—

—

788

Capital expenditure cash payments

283

115

91

122

—

—

611

Underlying EBITDA margin (%)

27.9

9.4

13.5

25.3

—

—

20.9

Return on capital employed (%)

25.6

11.2

10.4

26.6

—

—

19.3

Average number of employees (thousands)1

5.3

8.1

6.0

6.8

0.1

—

26.3

Note:

1 Presented on a full time employee equivalent basis

Reconciliation of underlying EBITDA and underlying operating profit to profit before tax

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Underlying EBITDA

852

730

1,482

Depreciation and impairments

(205)

(210)

(420)

Amortisation

(17)

(17)

(33)

Underlying operating profit

630

503

1,029

Special items (see note 5)

(100)

5

(61)

Net profit from equity accounted investees

—

—

1

Net finance costs

(40)

(47)

(85)

Profit before tax

490

461

884

Reconciliation of operating segment assets

Restated

Restated

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

€ million

Segment
assets

Segment net
assets

Segment
assets

Segment net
assets

Segment
assets

Segment net
assets

Group total

7,602

6,535

7,011

5,994

7,122

6,095

Unallocated

Investment in equity accounted investees

3

3

6

6

3

3

Deferred tax assets/(liabilities)

25

(216)

24

(227)

26

(222)

Other non-operating assets/(liabilities)

181

(356)

190

(300)

178

(337)

Group capital employed

7,811

5,966

7,231

5,473

7,329

5,539

Financial instruments/(net debt)

68

(2,450)

115

(1,679)

47

(1,532)

Total assets/equity

7,879

3,516

7,346

3,794

7,376

4,007

External revenue by location of production

External revenue by location of customer

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Revenue

Africa

South Africa

283

337

617

228

211

426

Rest of Africa

9

7

19

122

106

206

Africa total

292

344

636

350

317

632

Western Europe

Austria

587

545

1,043

81

71

146

Germany

437

448

891

496

478

952

United Kingdom

36

37

75

122

116

241

Rest of western Europe

281

258

532

758

684

1,340

Western Europe total

1,341

1,288

2,541

1,457

1,349

2,679

Emerging Europe

Poland

572

464

992

317

287

592

Rest of emerging Europe

741

688

1,348

523

460

954

Emerging Europe total

1,313

1,152

2,340

840

747

1,546

Russia

466

456

907

346

379

720

North America

272

301

583

366

389

747

South America

—

—

—

38

35

71

Asia and Australia

43

41

89

330

366

701

Group total

3,727

3,582

7,096

3,727

3,582

7,096

5 Special items

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Operating special items

Impairment of assets

(69)

—

(52)

Reversal of impairment of assets

2

—

14

Restructuring and closure costs

Personnel costs

(8)

—

(9)

Other restructuring and closure costs

(25)

5

(14)

Total special items before tax and non-controlling interests

(100)

5

(61)

Tax credit (see note 8)

19

—

8

Total special items attributable to shareholders

(81)

5

(53)

Operating special items

Restructuring and closure costs and related impairments during the six months ended 30 June 2018 comprise:

• Packaging Paper

Discontinuation of in-line silicone coating production at Steti, Czech Republic. Restructuring costs of €8 million and related impairment of assets of €47 million were recognised.

• Consumer Packaging

Restructuring of operations, primarily in the United Kingdom. Restructuring costs of €9 million and impairment of assets of €15 million were recognised.

Following the discontinuation of in-line silicone coating production at Steti, Czech Republic, restructuring costs of €3 million and related impairment of €2 million, offset by reversal of impairment of assets of €2 million, were recognised.

• Uncoated Fine Paper

Closure of an uncoated fine paper machine at Merebank, South Africa. Restructuring costs of €13 million and related impairment of assets of €5 million were recognised.

6 Write-down of inventories to net realisable value

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Write-down of inventories to net realisable value

(20)

(19)

(22)

Aggregate reversal of previous write-downs of inventories

9

14

19

7 Net finance costs

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Investment income

5

2

4

Net foreign currency losses

(2)

—

(2)

Finance costs

Interest expense

Interest on bank overdrafts and loans

(35)

(38)

(65)

Interest on lease liabilities

(7)

(7)

(14)

Net interest expense on net retirement benefits liability

(4)

(4)

(9)

Total interest expense

(46)

(49)

(88)

Less: Interest capitalised

3

—

1

Total finance costs

(43)

(49)

(87)

Net finance costs

(40)

(47)

(85)

8 Tax charge

The Group’s effective rate of tax before special items for the six months ended 30 June 2018, calculated on profit before tax and special items and including net profit from equity accounted investees, was 22% (six months ended 30 June 2017: 19%; year ended 31 December 2017: 19%).

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

UK corporation tax at 19.0% (2017: 19.25%)

1

1

1

SA corporation tax at 28% (2017: 28%)

4

13

28

Overseas tax

135

81

153

Current tax in respect of prior periods

(7)

—

5

Current tax

133

95

187

Deferred tax in respect of the current period

(1)

4

16

Deferred tax in respect of prior periods

—

(12)

(23)

Deferred tax attributable to a change in the rate of domestic income tax

—

—

1

Total tax charge before special items

132

87

181

Current tax on special items

(1)

—

(2)

Deferred tax on special items

(18)

—

(6)

Total tax credit on special items (see note 5)

(19)

—

(8)

Total tax charge

113

87

173

9 Earnings per share (EPS)

The calculation of basic and diluted EPS, basic and diluted underlying EPS and basic and diluted headline EPS is based on the following data:

Earnings

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Profit for the period attributable to shareholders

351

349

668

Special items (see note 5)

100

(5)

61

Related tax (see note 5)

(19)

—

(8)

Underlying earnings for the period

432

344

721

Special items not excluded from headline earnings

(33)

5

(23)

Loss on disposal of subsidiaries and other assets

6

2

1

Impairments not included in special items

—

—

4

Related tax

7

—

1

Headline earnings for the period

412

351

704

Weighted average number of shares

(Reviewed)

(Reviewed)

(Audited)

million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Basic number of ordinary shares outstanding

484.4

484.3

484.3

Effect of dilutive potential ordinary shares

0.2

0.4

0.3

Diluted number of ordinary shares outstanding

484.6

484.7

484.6

10 Dividends

The interim ordinary dividend for the year ending 31 December 2018 of 21.45 euro cents per share will be paid on 14 September 2018 to those shareholders on the register of Mondi plc on 24 August 2018. An equivalent South African rand interim ordinary dividend will be paid on 14 September 2018 to shareholders on the register of Mondi Limited on 24 August 2018. The dividend will be paid from distributable reserves of Mondi Limited and Mondi plc.

Dividends paid to the shareholders of Mondi Limited and Mondi plc are presented on a combined basis.

euro cents per share

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Final ordinary dividend paid (in respect of prior year)

42.90

38.19

38.19

Special dividend paid (in respect of prior year)

100.00

Interim ordinary dividend paid

19.10

Interim ordinary dividend declared for the six months ended 30 June

21.45

19.10

Final ordinary dividend proposed for the year ended 31 December 2017

42.90

Special dividend proposed for the year ended 31 December 2017

100.00

Total interim ordinary, final ordinary and special dividends proposed for period ended

21.45

19.10

142.90

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Final ordinary dividend paid (in respect of prior year)

207

180

180

Special dividend paid (in respect of prior year)

484

Interim ordinary dividend paid

93

Total ordinary and special dividends paid

691

180

273

Interim ordinary dividend declared for the six months ended 30 June

104

93

Final ordinary dividend proposed for the year ended 31 December 2017

208

Special dividend proposed for the year ended 31 December 2017

485

Total interim ordinary, final ordinary and special dividends proposed for the period ended

104

93

693

Declared by Group companies to non-controlling interests

17

21

22

Dividend timetable

The interim ordinary dividend for the year ending 31 December 2018 will be paid in accordance with the following timetable:

Share certificates on the South African registers of Mondi Limited and Mondi plc may not be dematerialised or rematerialised between 22 August 2018 and 26 August 2018, both dates inclusive, nor may transfers between the UK and South African registers of Mondi plc take place between 15 August 2018 and 26 August 2018, both dates inclusive.

Information relating to the dividend tax to be withheld from Mondi Limited shareholders and Mondi plc shareholders on the South African branch register will be announced separately, together with the ZAR/euro exchange rate to be applied, on or shortly after 3 August 2018.

11 Forestry assets

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

At 1 January

325

316

316

Capitalised expenditure

23

24

46

Acquisition of assets

5

1

3

Acquired through business combinations (see note 15)

14

—

—

Fair value gains

13

20

43

Impairment losses recognised

—

—

(3)

Felling costs

(32)

(41)

(73)

Currency movements

(27)

(8)

(7)

At 30 June / 31 December

321

312

325

The fair value of forestry assets is a level 3 measure in terms of the fair value measurement hierarchy (see note 19), consistent with prior years. The fair value of forestry assets is determined using a market approach.

12 Leases

From 1 January 2018 the Group early adopted IFRS 16, 'Leases'. Refer to note 2a and note 2b for the accounting policy and restatements, respectively. The right-of-use assets recognised on adoption of the new leasing Standard are reflected in the underlying asset classes of Property, plant and equipment, and related lease liabilities reflected as Borrowings.

Mondi has entered into various lease agreements. Leases over land and building have a weighted average term of 39 years, plant and equipment a weighted average term of 12 years and other assets a weighted average term of 4 years.

Right-of-use assets

Right-of-use asset

Depreciation charge

Restated

Restated

Restated

Restated

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Land and building

130

142

138

7

7

14

Plant and equipment

17

20

19

4

4

7

Other

11

13

12

3

3

6

Total

158

175

169

14

14

27

Additions to the right-of-use assets during the six months ended 30 June 2018 were €11 million (six months ended 30 June 2017: €18 million; year ended 31 December 2017: €27 million).

Lease liabilities

Restated

Restated

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Maturity analysis - contractual undiscounted cash flows

Less than one year

40

42

40

One to five years

97

111

105

More than five years

279

304

300

Total undiscounted cash flows

416

457

445

Total lease liabilities

197

213

208

Current

24

26

25

Non current

173

187

183

The total cash outflow for leases during the six months ended 30 June 2018 was €21 million (six months ended 30 June 2017: €22 million; year ended 31 December 2017: €41 million).

Amounts recognised in the condensed combined and consolidated income statement

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Interest on lease liabilities

7

7

14

Expenses relating to leases of low-value assets

1

—

—

13 Borrowings

Financing facilities

Group liquidity is provided through a range of committed debt facilities. The principal loan arrangements in place are the following:

€ million

Maturity

Interest rate %

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Financing facilities

Syndicated Revolving Credit Facility

July 2021

EURIBOR/LIBOR + margin

750

750

750

€500 million Eurobond

September 2020

3.375%

500

500

500

€500 million Eurobond

April 2024

1.500%

500

500

500

€600 million Eurobond

April 2026

1.625%

600

—

—

European Investment Bank Facility

June 2025

EURIBOR + margin

67

76

71

Export Credit Agency Facility

June 2020

EURIBOR + margin

24

43

34

Other

Various

Various

91

136

132

Total committed facilities

2,532

2,005

1,987

Drawn

(2,103)

(1,338)

(1,196)

Total committed facilities available

429

667

791

The €500 million Eurobond maturing in 2020 contains a coupon step-up clause whereby the coupon will be increased by 1.25% per annum if the Group fails to maintain at least one investment grade credit rating from either Moody’s Investors Service or Standard & Poor’s. Mondi currently has investment grade credit ratings from both Moody’s Investors Service (Baa1, outlook stable) and Standard & Poor’s (BBB+, outlook stable).

In April 2018 the Group issued a €600 million Eurobond maturing in 2026 at a coupon rate of 1.625% per annum. The Eurobond has been issued under the Group’s Guaranteed Euro Medium Term Note Programme.

Restated

Restated

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Secured

Bank loans and overdrafts

3

2

—

Lease liabilities

197

213

208

Secured

200

215

208

Unsecured

Bonds

1,592

995

995

Bank loans and overdrafts

719

564

349

Other loans

—

11

19

Total unsecured

2,311

1,570

1,363

Total borrowings

2,511

1,785

1,571

Maturity of borrowings

Current

305

351

291

Non-current

2,206

1,434

1,280

14 Retirement benefits

All assumptions related to the Group’s material defined benefit schemes and post-retirement medical plan liabilities were re-assessed individually and the remaining defined benefit schemes and unfunded statutory retirement obligations were re-assessed in aggregate for the six months ended 30 June 2018. Due to changes in assumptions and exchange rate movements, the net retirement benefits liability decreased by €5 million and the net retirement benefits asset increased by €5 million. The assets backing the defined benefit scheme liabilities reflect their market values as at 30 June 2018. Net remeasurement gains arising from changes in assumptions amounting to €4 million before tax have been recognised in the condensed combined and consolidated statement of comprehensive income.

15 Business combinations

To 30 June 2018

Acquisition of Powerflute Group Holdings Oy

Mondi acquired 100% of the outstanding share capital of Powerflute Group Holdings Oy (Powerflute) on 1 June 2018 for a total consideration of €363 million on a debt and cash-free basis.

Powerflute operates an integrated pulp and paper mill in Kuopio, Finland, with an annual production capacity of 285,000 tonnes of high-performance semi-chemical fluting. Powerflute’s premium semi-chemical fluting is sold to a diverse range of customers, primarily for packaging fresh fruit and vegetables, but also other end-uses such as electronics, chemicals and pharmaceuticals. The provisional goodwill arising on the acquisition is attributable to the anticipated synergies from integrating Powerflute into the Group, the benefits from the skilled workforce and the expansion of the product range and geographic reach of Mondi's containerboard business.

Powerflute's revenue for the six months ended 30 June 2018 was €84 million with a profit after tax of €10 million. Powerflute's revenue of €13 million and profit after tax of €nil since the date of acquisition have been included in the condensed combined and consolidated income statement.

Details of the net assets acquired, as adjusted from book to fair value, are as follows:

Mondi acquired 100% of the outstanding shares in National Company for Paper Products and Import & Export (S.A.E.) (NPP) on 20 June 2018 for a total consideration of EGP510 million (€25 million) on a debt and cash-free basis. NPP is an industrial bags producer, operating one plant in Giza near Cairo, Egypt, serving mostly regional customers.

NPP's revenue for the six months ended 30 June 2018 was €17 million with a profit after tax of €1 million. NPP's revenue of €nil and profit after tax of €nil since the date of acquisition have been included in the condensed combined and consolidated income statement.

Mondi acquired the operating business and the underlying assets and liabilities of World Hardwood Proprietary Limited (World Hardwood) on 1 May 2018 for a consideration of ZAR408 million (€27 million) on a debt and cash-free basis. World Hardwood is a supplier of wood and operates two plantations in Draycott and Greytown, South Africa. The acquisition increases the level of secure wood supply.

World Hardwood's revenue for the six months ended 30 June 2018 was €nil with a profit after tax of €1 million. World Hardwood's revenue of €nil and profit after tax of €1 million since the date of acquisition have been included in the condensed combined and consolidated income statement.

Details of the net assets acquired in relation to NPP and World Hardwood, as adjusted from book to fair value, are as follows:

Transaction costs of €8 million were charged to the condensed combined and consolidated income statement.

Goodwill arising on the above business combinations is not tax deductible.

The fair value accounting of these acquisitions is provisional in nature. The nature of the businesses is such that further adjustments to the carrying values of acquired assets and/or liabilities, and adjustments to the purchase price, are possible as the detail of the acquired businesses is evaluated post acquisition. If necessary, any adjustments to the fair values recognised will be made within 12 months of the acquisition date.

In respect of trade and other receivables, the gross contractual amounts receivable less the best estimates at the acquisition dates of the contractual cash flows not expected to be collected approximate the book values as presented.

To 31 December 2017

Mondi acquired 100% of the outstanding share capital of Excelsior Technologies Limited (Excelsior) on 3 February 2017 for a total consideration of GBP34 million (€40 million) on a debt and cash-free basis. Excelsior is a vertically-integrated producer of innovative flexible packaging solutions, mainly for food applications.

Mondi acquired the remaining shares of Mondi TSP Co., Ltd. (TSP) that it did not already own (representing an interest of 50%) on 26 July 2017 for a consideration of THB143 million (€4 million) on a debt and cash-free basis. TSP operates a plant near Bangkok, Thailand, and produces consumer goods packaging products with a focus on retort stand-up pouches for the food and pet food industry.

€ million

Goodwill

Net assets

Net cash paid

Excelsior

21

12

31

SK Recycling

—

1

1

TSP

3

4

3

Acquisitions total

24

17

35

Purchase price adjustment (Uralplastic)

2

—

2

Acquisitions total including adjustments

26

17

37

16 Consolidated cash flow analysis

(a) Reconciliation of profit before tax to cash generated from operations

Restated

Restated

€ million

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Profit before tax

490

461

884

Depreciation and amortisation

222

227

449

Net cash flow effect of current and prior period special items

90

(5)

40

Net finance costs

40

47

85

Decrease in provisions and net retirement benefits

(12)

(11)

(16)

Movement in working capital

(148)

(141)

(122)

Fair value gains on forestry assets

(13)

(20)

(43)

Felling costs

32

41

73

Loss on disposal of subsidiaries and other assets

6

2

1

Other adjustments

15

11

12

Cash generated from operations

722

612

1,363

(b) Cash and cash equivalents

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Cash and cash equivalents per condensed combined and consolidated statement of financial position

54

104

38

Bank overdrafts included in short-term borrowings

(67)

(72)

(104)

Cash and cash equivalents per condensed combined and consolidated statement of cash flows

(13)

32

(66)

(c) Movement in net debt

The Group’s net debt position is as follows:

€ million

Cash and
cash
equivalents

Current financial asset investments

Total assets

Debt due
within one
year

Debt due
after one
year

Debt-related derivative financial instruments

Total debt

Total net
debt

At 1 January 2017, as previously reported (Audited)

377

2

379

(624)

(1,119)

(19)

(1,762)

(1,383)

Impact of change in accounting policy

—

—

—

(22)

(190)

—

(212)

(212)

Restated balance at 1 January 2017

377

2

379

(646)

(1,309)

(19)

(1,974)

(1,595)

Cash flow (Restated)

(343)

(1)

(344)

396

(146)

—

250

(94)

Additions to lease liabilities (Restated)

—

—

—

(4)

(14)

—

(18)

(18)

Acquired through business combinations

—

—

—

(1)

(8)

—

(9)

(9)

Movement in unamortised loan costs

—

—

—

—

(1)

—

(1)

(1)

Net movement in derivative financial instruments

—

—

—

—

—

19

19

19

Reclassification (Restated)

—

2

2

(31)

31

—

—

2

Currency movements (Restated)

(2)

—

(2)

7

13

(1)

19

17

Restated balance at 30 June 2017

32

3

35

(279)

(1,434)

(1)

(1,714)

(1,679)

Cash flow (Restated)

(96)

—

(96)

108

132

—

240

144

Additions to lease liabilities (Restated)

—

—

—

(1)

(8)

—

(9)

(9)

Acquired through business combinations

—

(1)

(1)

(1)

—

—

(1)

(2)

Movement in unamortised loan costs

—

—

—

—

(1)

—

(1)

(1)

Net movement in derivative financial instruments

—

—

—

—

—

1

1

1

Reclassification (Restated)

—

(1)

(1)

(23)

23

—

—

(1)

Currency movements (Restated)

(2)

—

(2)

9

8

—

17

15

Restated balance at 31 December 2017

(66)

1

(65)

(187)

(1,280)

—

(1,467)

(1,532)

Cash flow

46

—

46

(9)

(954)

—

(963)

(917)

Additions to lease liabilities

—

—

—

(3)

(8)

—

(11)

(11)

Acquired through business combinations (see note 15)

—

—

—

(31)

—

—

(31)

(31)

Movement in unamortised loan costs

—

—

—

—

(1)

—

(1)

(1)

Net movement in derivative financial instruments

—

—

—

—

—

6

6

6

Reclassification

—

—

—

(21)

21

—

—

—

Currency movements

7

—

7

13

16

—

29

36

At 30 June 2018

(13)

1

(12)

(238)

(2,206)

6

(2,438)

(2,450)

17 Capital commitments

Capital commitments are based on capital projects approved to date and the budget approved by the Boards. As previously indicated, capital expenditure for 2018 is expected to be in the range of €700-€800 million. These capital projects are expected to be financed from existing cash resources and borrowing facilities.

18 Contingent liabilities

Contingent liabilities comprise aggregate amounts as at 30 June 2018 of €6 million (as at 30 June 2017: €6 million; as at 31 December 2017: €6 million) in respect of loans and guarantees given to banks and other third parties. No acquired contingent liabilities have been recorded in the Group’s condensed combined and consolidated statement of financial position for all periods presented.

The Group is subject to certain legal proceedings, claims, complaints and investigations arising out of the ordinary course of business. Legal proceedings may include, but are not limited to, alleged breach of contract and alleged breach of environmental, competition, securities and health and safety laws. The Group may not be insured fully, or at all, in respect of such risks. The Group cannot predict the outcome of individual legal actions or claims or complaints or investigations. The Group may settle litigation or regulatory proceedings prior to a final judgment or determination of liability. The Group may do so to avoid the cost, management efforts or negative business, regulatory or reputational consequences of continuing to contest liability, even when it considers it has valid defences to liability. The Group considers that no material loss to the Group is expected to result from these legal proceedings, claims, complaints and investigations. Provision is made for all liabilities that are expected to materialise through legal and tax claims against the Group.

19 Fair value measurement

Assets and liabilities that are measured at fair value, or where the fair value of financial instruments has been disclosed in the notes to the condensed combined and consolidated financial statements, are based on the following fair value measurement hierarchy:

• level 2 – inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices); and

• level 3 – inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The assets measured at fair value on level 3 of the fair value measurement hierarchy are the Group’s forestry assets as set out in note 11, certain assets acquired or liabilities assumed in business combinations.

There have been no transfers of assets or liabilities between levels of the fair value hierarchy during the period.

The fair values of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) are determined using generally accepted valuation techniques. These valuation techniques maximise the use of observable market data and rely as little as possible on Group specific estimates.

• the fair values of interest rate swaps and foreign exchange contracts are calculated as the present value of expected future cash flows based on observable yield curves and exchange rates;

• the fair values of the Group’s commodity price derivatives are calculated as the present value of expected future cash flows based on observable market data; and

• other techniques, including discounted cash flow analysis, are used to determine the fair values of other financial instruments.

Except as detailed below, the directors consider that the carrying values of financial assets and financial liabilities recorded at amortised cost in the condensed combined and consolidated financial statements are approximately equal to their fair values.

Carrying amount

Fair value

Restated

Restated

Restated

Restated

€ million

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

As at 30 June 2018

As at 30 June 2017

As at 31 December 2017

Financial liabilities

Borrowings

2,314

1,572

1,363

2,365

1,634

1,421

20 Related party transactions

The Group and its subsidiaries, in the ordinary course of business, enter into various sale, purchase and service transactions with equity accounted investees and others in which the Group has a material interest. These transactions are under terms that are no less favourable than those arranged with third parties. These transactions, in total, are not considered to be significant.

Transactions between Mondi Limited, Mondi plc and their respective subsidiaries, which are related parties, have been eliminated on consolidation.

There have been no significant changes to the related parties as disclosed in note 30 of the Group’s Integrated report and financial statements 2017.

21 Events occurring after 30 June 2018

With the exception of the interim dividend declared for the six months ended 30 June 2018 (see note 10), and the reorganisation of business segments described below, there have been no material reportable events since 30 June 2018.

Reoganisation of business segments

Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and operational coordination across the fibre based packaging value chain. The changes to the Group’s business units, and consequently to the Group’s segmental reporting, are as follows:

• Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging; and

• there were no changes to the Consumer Packaging or Uncoated Fine Paper business units.

The Group’s restated segmental reporting for the six months ended 30 June 2018 and the comparative reporting periods for the six months ended 30 June 2017 and the year ended 31 December 2017 are disclosed later in this document. The reorganisation has no impact on the overall Group result.

Production statistics

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Packaging Paper

Containerboard

'000 tonnes

1,189

1,119

2,297

Kraft paper

'000 tonnes

605

606

1,206

Softwood pulp

'000 tonnes

1,028

1,005

2,010

Internal consumption

'000 tonnes

958

931

1,874

Market pulp

'000 tonnes

70

74

136

Hardwood pulp

'000 tonnes

292

250

547

Internal consumption

'000 tonnes

292

246

543

Market pulp

'000 tonnes

—

4

4

Fibre Packaging

Corrugated board and boxes

million m²

814

820

1,650

Industrial bags

million units

2,600

2,513

4,952

Extrusion coatings

million m²

665

667

1,281

Consumer Packaging

Consumer packaging

million m2

3,819

3,783

7,437

Uncoated Fine Paper

Uncoated fine paper

'000 tonnes

840

818

1,644

Softwood pulp

'000 tonnes

174

197

375

Internal consumption

'000 tonnes

159

189

358

Market pulp

'000 tonnes

15

8

17

Hardwood pulp

'000 tonnes

587

675

1,345

Internal consumption

'000 tonnes

452

465

950

Market pulp

'000 tonnes

135

210

395

Newsprint

'000 tonnes

102

159

277

Exchange rates

Average

Closing

versus euro

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

Six months ended 30 June 2018

Six months ended 30 June 2017

Year ended 31 December 2017

South African rand

14.89

14.31

15.04

16.05

14.92

14.81

Czech koruna

25.50

26.78

26.33

26.02

26.20

25.54

Polish zloty

4.22

4.27

4.26

4.37

4.23

4.18

Pounds sterling

0.88

0.86

0.88

0.89

0.88

0.89

Russian rouble

71.96

62.76

65.88

73.16

67.54

69.39

Turkish lira

4.96

3.94

4.12

5.34

4.01

4.55

US dollar

1.21

1.08

1.13

1.17

1.14

1.20

Operating segments (Restated)

Effective from 1 August 2018, the Group reorganised its business units to achieve improved strategic alignment and operational coordination across the fibre based packaging value chain. The changes to the Group’s business units, and consequently to the Group’s segmental reporting, are as follows:

• Packaging Paper and Fibre Packaging were replaced by a single business unit called Fibre Packaging; and

• there were no changes to the Consumer Packaging or Uncoated Fine Paper business units.

The Group’s restated segmental reporting for the six months ended 30 June 2018 and the comparative reporting periods for the six months ended 30 June 2017 and the year ended 31 December 2017 are disclosed below. The reorganisation has no impact on the overall Group result.

Six months ended 30 June 2018 (Restated)

€ million, unless otherwise stated

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate & other

Intersegment elimination

Total

Segment revenue

2,020

822

941

—

(56)

3,727

Internal revenue

(30)

(3)

(23)

—

56

—

External revenue

1,990

819

918

—

—

3,727

Underlying EBITDA

535

103

230

(16)

—

852

Depreciation and impairments

(112)

(31)

(61)

(1)

—

(205)

Amortisation

(7)

(9)

(1)

—

—

(17)

Underlying operating profit/(loss)

416

63

168

(17)

—

630

Special items

(55)

(27)

(18)

—

—

(100)

Operating segment assets

4,274

1,543

1,831

7

(53)

7,602

Operating segment net assets

3,714

1,295

1,523

3

—

6,535

Additions to non-current
non-financial assets

588

42

129

—

—

759

Capital expenditure cash payments

225

38

84

—

—

347

Underlying EBITDA margin (%)

26.5

12.5

24.4

—

—

22.9

Return on capital employed (%)

24.3

10.4

26.5

—

—

21.3

Average number of employees (thousands)1

13.3

5.9

6.5

0.1

—

25.8

Six months ended 30 June 2017 (Restated)

€ million, unless otherwise stated

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate & other

Intersegment elimination

Total

Segment revenue

1,850

839

947

—

(54)

3,582

Internal revenue

(28)

(2)

(24)

—

54

—

External revenue

1,822

837

923

—

—

3,582

Underlying EBITDA

402

109

240

(21)

—

730

Depreciation and impairments

(110)

(34)

(65)

(1)

—

(210)

Amortisation

(5)

(11)

(1)

—

—

(17)

Underlying operating profit/(loss)

287

64

174

(22)

—

503

Special items

5

—

—

—

—

5

Operating segment assets

3,662

1,570

1,822

10

(53)

7,011

Operating segment net assets

3,152

1,327

1,508

7

—

5,994

Additions to non-current
non-financial assets

176

79

84

—

—

339

Capital expenditure cash payments

169

36

49

—

—

254

Underlying EBITDA margin (%)

21.7

13.0

25.3

—

—

20.4

Return on capital employed (%)

19.4

9.8

27.1

—

—

18.5

Average number of employees (thousands)1

13.5

6.0

6.8

0.1

—

26.4

Year ended 31 December 2017 (Restated)

€ million, unless otherwise stated

Fibre Packaging

Consumer Packaging

Uncoated Fine Paper

Corporate & other

Intersegment elimination

Total

Segment revenue

3,735

1,646

1,832

—

(117)

7,096

Internal revenue

(64)

(5)

(48)

—

117

—

External revenue

3,671

1,641

1,784

—

—

7,096

Underlying EBITDA

833

222

464

(37)

—

1,482

Depreciation and impairments

(227)

(67)

(125)

(1)

—

(420)

Amortisation

(10)

(21)

(2)

—

—

(33)

Underlying operating profit/(loss)

596

134

337

(38)

—

1,029

Special items

3

(49)

(15)

—

—

(61)

Operating segment assets

3,794

1,552

1,826

17

(67)

7,122

Operating segment net assets

3,246

1,326

1,515

8

—

6,095

Additions to non-current
non-financial assets

451

146

191

—

—

788

Capital expenditure cash payments

398

91

122

—

—

611

Underlying EBITDA margin (%)

22.3

13.5

25.3

—

—

20.9

Return on capital employed (%)

20.6

10.4

26.6

—

—

19.3

Average number of employees (thousands)1

13.4

6.0

6.8

0.1

—

26.3

Note:

1 Presented on a full time employee equivalent basis

Alternative Performance Measures

The Group presents certain measures of financial performance, position or cash flows in the condensed combined and consolidated financial statements that are not defined or specified according to IFRS. These measures, referred to as Alternative Performance Measures (APMs), are prepared on a consistent basis for all periods presented in this report.

The most significant APMs are:

Net debt (note 16c)

A measure comprising short, medium, and long-term interest-bearing borrowings and the fair value of debt-related derivatives less cash and cash equivalents and current financial asset investments. Net debt provides a measure of the Group’s net indebtedness or overall leverage.

Return on capital employed (ROCE) (note 4)

Trailing 12-month underlying operating profit, including share of equity accounted investees' net profit/(loss), divided by trailing 12-month average capital employed. Capital employed is adjusted for spend on those strategic projects which are not yet in production. Segments’ 12-month average capital employed has been extracted from management reports. ROCE provides a measure of the efficient and effective use of capital in the business and is used for incentive purposes.

Special items (note 5)

Those financial items which the Group considers should be separately disclosed on the face of the condensed combined and consolidated income statement to assist in understanding the underlying financial performance achieved by the Group. Such items are generally material by nature and exceed €10 million and the Group, therefore, excludes these items when reporting underlying earnings and related measures in order to provide a measure of the underlying performance of the Group on a basis that is comparable from year to year.

Underlying EBITDA (note 4)

Operating profit before special items, depreciation, amortisation and impairments not recorded as special items. Underlying EBITDA provides a measure of the absolute growth in the cash generating ability of the business and is used for incentive purposes.

Operating profit before special items. Underlying operating profit provides a measure of operating performance and absolute growth in profitability of the operations.

Underlying profit before tax (condensed combined and consolidated income statement)

Profit before tax and special items. Underlying profit before tax provides a measure of the absolute growth in profitability before tax.

Underlying earnings (and per share measure) (note 9)

Net profit after tax attributable to shareholders, before special items. Underlying earnings (and the related per share measure based on the basic, weighted average number of ordinary shares outstanding), provides a measure of the Group’s absolute growth in earnings.

Underlying and headline EPS (note 9)

Underlying EPS excludes the impact of special items and is a non-IFRS measure. It is included to provide an additional basis on which to measure the Group’s earnings performance. The presentation of headline EPS is mandated under the Listings Requirements of the JSE Limited and is calculated in accordance with Circular 4/2018, ‘Headline Earnings’, as issued by the South African Institute of Chartered Accountants.

Cash flow generation

A measurement of the Group’s cash generation before considering deployment of cash towards investment in property, plant and equipment (‘capex’ or ‘capital expenditure’), acquisitions and disposals, payment of dividends to shareholders and injection by or outflow from purchase of non-controlling interests. Cash flow generation is a measure of the Group’s ability to generate cash through the cycle before considering deployment of such cash.

Underlying EBITDA margin (note 4)

Underlying EBITDA expressed as a percentage of revenue provides a measure of the cash generating ability relative to revenue.

Underlying operating profit margin

Underlying operating profit expressed as a percentage of revenue provides a measure of the profitability of the operations relative to revenue.

Ordinary dividend cover

Basic underlying EPS divided by total ordinary dividend per share paid and proposed provides a measure of the Group’s earnings relative to its deployment towards ordinary dividend payments.

Underlying tax charge expressed as a percentage of underlying profit before tax. A measure of the Group’s tax charge relative to its profit before tax expressed on an underlying basis.

Working capital as a percentage of revenue

Working capital, defined as the sum of trade and other receivables and inventories less trade and other payables, expressed as a percentage of trailing 12-month Group revenue. A measure of the Group’s effective use of working capital relative to revenue.

Capex and investment in intangible assets as a percentage of depreciation, amortisation and impairments

Capex and investment in intangible assets divided by depreciation, amortisation and non-special impairments provides a measure of reinvestment into the Group’s asset base relative to depreciation, amortisation and impairments.

Forward-looking statements

This document includes forward-looking statements. All statements other than statements of historical facts included herein, including, without limitation, those regarding Mondi’s financial position, business strategy, market growth and developments, expectations of growth and profitability and plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as “believe”, “expects”, “may”, “will”, “could”, “should”, “shall”, “risk”, “intends”, “estimates”, “aims”, “plans”, “predicts”, “continues”, “assumes”, “positioned” or “anticipates” or the negative thereof, other variations thereon or comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Mondi, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements and other statements contained in this document regarding matters that are not historical facts involve predictions and are based on numerous assumptions regarding Mondi’s present and future business strategies and the environment in which Mondi will operate in the future. These forward-looking statements speak only as of the date on which they are made.

No assurance can be given that such future results will be achieved; various factors could cause actual future results, performance or events to differ materially from those described in these statements. Such factors include in particular but without any limitation: (1) operating factors, such as continued success of manufacturing activities and the achievement of efficiencies therein, continued success of product development plans and targets, changes in the degree of protection created by Mondi’s patents and other intellectual property rights and the availability of capital on acceptable terms; (2) industry conditions, such as strength of product demand, intensity of competition, prevailing and future global market prices for Mondi’s products and raw materials and the pricing pressures thereto, financial condition of the customers, suppliers and the competitors of Mondi and potential introduction of competing products and technologies by competitors; and (3) general economic conditions, such as rates of economic growth in Mondi’s principal geographical markets or fluctuations of exchange rates and interest rates.

Mondi expressly disclaims a) any warranty or liability as to accuracy or completeness of the information provided herein; and b) any obligation or undertaking to review or confirm analysts’ expectations or estimates or to update any forward-looking statements to reflect any change in Mondi’s expectations or any events that occur or circumstances that arise after the date of making any forward-looking statements, unless required to do so by applicable law or any regulatory body applicable to Mondi, including the JSE Limited and the LSE.

Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Group’s auditors.

Editors’ notes

Mondi is a global leader in packaging and paper, delighting its customers and consumers with innovative and sustainable packaging and paper solutions. Mondi is fully integrated across the packaging and paper value chain - from managing forests and producing pulp, paper and plastic films, to developing and manufacturing effective industrial and consumer packaging solutions. Sustainability is embedded in everything Mondi does. In 2017, Mondi had revenues of €7.10 billion and underlying EBITDA of €1.48 billion.

Mondi has a dual listed company structure, with a primary listing on the JSE Limited for Mondi Limited under the ticker MND, and a premium listing on the London Stock Exchange for Mondi plc, under the ticker MNDI. Mondi is a FTSE 100 constituent, and has been included in the FTSE4Good Index Series since 2008 and the FTSE/JSE Responsible Investment Index Series since 2007.

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